You can sit at the computer all day and search legal data bases until the cows come home as they say. At the end of the day, you will not find reported decisions in lawsuits that address the legal validity of nondisclosure agreements (NDAs), with one huge exception. You will likely be overwhelmed by the number of decisions you will find in the traditional business context in which NDAs began, such as to protect trade secrets.
It has been said that the closest authority we have on whether NDAs are valid is in decisions like the one in Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045 (Fla. 3d DCA 2014). That case involved one Patrick Snay, his daughter who was not given a name in the appellate court's opinion, and Gulliver Schools, Inc. Mr. Snay was the headmaster at Gullliver and his contract was not renewed. Snay filed a complaint in Florida Circuit Court against Gulliver in two counts, in which he alleged age discrimination and retaliation under Florida's Civil Rights Act.
Snay and Gulliver settled Snay's discrimination lawsuit. They settled on a general release and settlement agreement. Their settlement agreement included a confidentiality provision or nondisclosure agreement, which the Court quoted in part:
- Confidentiality ... [T]he plaintiff shall not either directly or indirectly, disclose, discuss or communicate to any entity or person, except his attorneys or other professional advisors or spouse any information whatsoever regarding the existence or terms of this Agreement ... A breach ... will result in disgorgement of the Plaintiffs portion of the settlement Payments [which totaled $80,000.00, the Court said].
Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045, 1046 (Fla. 3d DCA 2014) (emphasis by the Court). Mr. Shay knew that he had to tell his daughter something when he and his wife returned to her after the settlement conference ended. In a deposition which the trial court permitted Gulliver Schools to take, Snay testified in part:
What happened is that after settlement my wife and I went in the parking lot, and we had to make some decisions on what we were going to tell my daughter. Because it’s very important to understand that she was an intricate part of what was happening. She was retaliated against at Gulliver. So she knew we were going to some sort of mediation. She was very concerned about it. Because of what happened at Gulliver, she had quite a few psychological scars which forced me to put her into therapy.
So there was a period of time that there was an unresolved enclosure for my wife and me. It was very important with her. We understood the confidentiality. So we knew what the restrictions were, yet we needed to tell her something.
Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045, 1048 n.5 (Fla. 3d DCA 2014). Snay also testified that “[m]y conversation with my daughter was that it was settled and we were happy with the results[.]” Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045, 1048 (Fla. 3d DCA 2014).
Mr. Snay's daughter then went on Facebook with a post heard 'round the world, or close to it. In fact, the Gulliver case is well known for her Facebook post:
Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.
Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045, 1046 (Fla. 3d DCA 2014). Faced with this evidence, the trial judge ruled that neither Mr. Snay's comments to his daughter, nor the Snay daughter's Facebook post, breached the nondisclosure agreement quoted above. Accordingly, this behavior was no obstacle to Snay's motion to enforce the settlement agreement Gulliver Schools appealed to the Third District Court of Appeal, which disagreed and reversed.
At this point I would like to tell you an anecdote from a hearing I attended in Florida Circuit Court in Pensacola some years ago. Another lawyer cited a Third DCA case while arguing a motion. The Judge said: "That case was decided by the Third DCA? It is distinguishable on that ground alone." We all laughed nervously. The Judge denied the motion.
The Third District's decision in the Gulliver appeal does not seem to turn on the Facebook posting, although the opinion included the rather testy observation that the confidentiality provision or NDA quoted above was clearly significant because "Snay’s entitlement to a significant sum of money is expressly conditioned on his compliance with this provision. It is also highlighted by the ramifications visited on Gulliver as a consequence of Snay’s breach/disclosure when his daughter communicated to 1200 people, many associated with Gulliver, that Snay had been justified in his discrimination and retaliation claims." Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045, 1048 n.4 (Fla. 3d DCA 2014) (emphasis added). The appellate opinion called this provision "[c]entral to this agreement[.]"
The appellate panel held unanimously that the confidentiality provision-NDA was clear. It prohibited Mr. and Mrs. Snay from disclosing "'either directly or indirectly'" to anyone other than their lawyers or other professionals "'any information' regarding the existence or the terms of the parties' agreement." Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045, 1047-48 (Fla. 3d DCA 2014) (emphasis by the Court). In the eyes of the appellate panel, Patrick Snay breached this nondisclosure provision by telling his daughter simply that the case was settled and that he and his wife were happy with the results:
Because Snay’s deposition testimony that “[m]y conversation with my daughter was that it was settled and we were happy with the results,” establishes a breach of this provision, the court below should have denied his motion for enforcement of the agreement.
Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045, 1048 (Fla. 3d DCA 2014).
That was it. For all that appears from this opinion, the central issue in the case concerned Snay's revelation to his daughter that the parents were happy with the results and that a settlement agreement existed.
There was never any other issue presented on appeal, at least so far as can be seen from any fairly exhaustive reading of the appellate opinion, such as this article has provided here. But what if other issues had been argued on appeal? What about public policy, for instance?
Could the appellate panel have upheld the agreement and denied Snay's motion to enforce the settlement agreement if they had confronted an issue of whether it is against public policy to conceal the existence of a settlement of Snay's claims for age discrimination and for retaliation under the Florida Civil Rights Act?
Or that it is against public policy to conceal one or more of the terms of that settlement?
It is against public policy in Florida to permit liability insurance coverage for intentional religious discrimination. Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So. 2d 1005 (Fla. 1989). The reasons are instructive.
In Bal Harbour, the Supreme Court of Florida observed that the rationale underlying the insurance industry's rule ordinarily barring liability insurance coverage against a person's own intentional misconduct "is that the availability of insurance will directly stimulate the intentional wrongdoer to violate the law." There are exceptions to this rule, the Court noted, but there is no "blanket exception for intentional religious discrimination[.]" Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So. 2d 1005, 1007 (Fla. 1989).
Similarly, there is no exception to the rule barring contracts against public policy for alleged age discrimination or for discriminatory retaliation -- nor for alleged sexual harassment. And manifestly there is no "good cause" to permit concealment of predation in any of these forms or in any other form for that matter.
It will undoubtedly be argued that making alleged discriminatory conduct a secret will not encourage it. That argument too was made by the proponents of liability insurance coverage for the alleged intentional racial discrimination in the Bal Harbour case. "This supposition is lacking in empirical support and defies human experience," the Supreme Court of Florida replied. Intentional religious discrimination "is not a crime," and so it is not deterred by the criminal laws. Neither does it bring a "risk of injury" to the perpetrators, and so risk of injury is not a deterrent, either.
Similarly, in matters of concealed allegations of age discrimination and discriminatory retaliation, and in many matters of alleged sexual harassment such as allegedly creating a hostile workplace environment, there is no crime involved and there is once again no risk of injury to the perpetrators, and so there is no deterrent apart from exposing those allegations and that conduct to the public who can then take steps to protect themselves from the possible dangers.
A final argument made in favor of extending liability insurance coverage to the alleged intentional religious discrimination in the Bal Harbour case, was that if there were no insurance, there would be no capacity to collect on damage awards for proven infractions. Similarly, it will no doubt be argued in favor of concealing alleged age discrimination and alleged discriminatory retaliation, as it is argued in favor of nondisclosure agreements for sexual misconduct, harassment, and more -- that if nondisclosure is not permitted, then there will be no settlements and therefore these claims will not be paid.
'Baloney,' the Florida Supreme Court said, in effect, when it replied to this argument:
We disagree. The bulk of discrimination cases are brought against commercial enterprises that have discriminated in the marketplace or workplace. These businesses generally have far greater resources than do individuals and to hold the acts of such parties uninsurable would result in relatively few instances where the injury would go uncompensated. Such was the case in the present claim.
Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So. 2d 1005, 1009 (Fla. 1989).
So, there you have the central arguments pro and con on the issue of whether a nondisclosure agreement should be held valid or invalid in the face of public policy. The only way we may be able to see how the Courts rule on these and similar arguments in actual cases is if these arguments are actually made.
Next: What does the U.S. Constitution have to say? What do State Constitutions have to say as well?
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